Pacific Brands loss grows on $A502.7m writedown, CEO to leave

Departing chief executive Sue Morphet

BUSINESSDESK: Pacific Brands, the Australian apparel company with brands including Bonds, Sheridan, Stussy and Mossimo, widened its annual loss after writing down goodwill by $A502.7 million and announcing chief executive Sue Morphet will leave after five years in the job.

The loss was $A450.7 million, or 49.1 Australian cents a share, in the 12 months ended June 30, from a loss of $A131.9 million, or 14.2 cents, a year earlier, the Melbourne-based company says.

Sales fell 18% to $A1.32 billion. Underlying pretax earnings of $A129.1 million were at the top end of guidance of between $A125 million and $A130 million.

"In addition to the tough consumer and business environment, this year our businesses have also been managing the Kmart transition and cotton price volatility," Ms Morphet says.

"The company is continuing to focus on its strategy of investing in its key brands and diversifying its channels to market."

Ms Morphet used today's result to announce she will resign from the top job on September 3, handing over the role to John Pollaers.

She came under pressure in 2009 when she got a pay rise to more than $A1.8 million from about $A680,000 as the manufacturer posted a big loss and slashed jobs across Australia as it shifted work to China.

"It would be fair to say there have been some very difficult times and some great times as we have made the changes necessary to set Pacific Brands up for future strength and growth," Ms Morphet says.

The company signalled it expects tough market conditions to persist through the 2013 financial year and earnings may be impacted by more restructuring and rationalisation.

The board declared a fully-franked final dividend of 2.5 Australian cents per share, taking the annual return to 4.5 cents, or $A41.1 million.

The dual-listed shares were unchanged at 75 cents on the NZX and 59 Australian cents on the ASX.

The stock is rated an average "hold" according to 15 analyst recommendations compiled by Reuters, with a median target price 65.65 Australian cents.

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